LG Energy Solution ponders acquiring GM's stake in Michigan battery plant

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LG Energy Solution ponders acquiring GM's stake in Michigan battery plant

Published: 03 Dec. 2024, 08:31 Updated: 03 Dec. 2024, 18:19

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

Kim Dong-myung, left, CEO of LG Energy Solution and Mary Barra, CEO of General Motors, pose for a photo after making their investment plan in building a third battery plant in Lansing, Michigan, in 2022. [LG ENERGY SOLUTION]

LG Energy Solution is considering purchasing General Motors's (GM) entire stake in its third joint-venture battery plant in Michigan, as the Detroit-based automaker slows EV investment ahead of the second Donald Trump administration.

The Korean battery maker is likely to run the plant solely on its own to meet an order by Toyota Motor after inking a 10-year deal to supply 20 gigawatt-hours of batteries per year.

GM said Tuesday that it signed "a nonbinding agreement to sell its stake" in the plant in Lansing, Michigan, to LG Energy Solution, adding that the transaction is expected to close in the first quarter of 2025.

The sell-off does not affect GM's ownership stakes in the companies' two other battery plants in Ohio and Tennessee. LG Energy Solution and GM formed Ultium Cells in 2019, a 50:50 battery venture, and announced three plants in the United States.

LG Energy Solution also confirmed that it is mulling the acquisition, citing the need to "maximize the operations and efficiency of [its] North American investment."

The deal is reportedly valued at about $1 billion, according to Reuters, though the exact amount has not been confirmed.

Ultium Cells' third plant in Michigan. Ultium Cells is a 50:50 joint battery venture between LG Energy Solution and General Motors. [LG ENERGY SOLUTION]

Construction of the Michigan plant, where they committed $2.6 billion, was halted in July amid an overall slowdown in EV demand. It was scheduled to begin operations next year with 36 gigawatt-hours of production capacity, which will later be ramped up to 50.

The announcement comes as GM has revised its EV production target for the year, lowering it from 200,000 to 300,000 units to 200,000 to 250,000 units due to slower-than-expected demand growth.

GM CEO Mary Barra also hinted that the automaker won't hit its production goal of 1 million EVs in North America by the end of 2025.

Ultium Cells employees work at its battery manufacturing plant in Lordstown, Ohio. Ultium Cells is a 50:50 joint battery venture between LG Energy Solution and General Motors. [LG ENERGY SOLUTION]

Despite the U.S. carmaker's move, the duo is expanding cooperation in battery development, announcing a strategic partnership to co-develop prismatic batteries on Tuesday. LG Energy has only been producing cylindrical and pouch-type batteries so far, and it's first time the company has officially confirmed its entry into the new type.

Covered with aluminum, the rectangular prismatic batteries are known to be sturdy against external shocks while boasting improved safety and durability.

"It can reduce EV weight and cost, while simplifying manufacturing by reducing the number of modules and mechanical components," LG Energy said.

If successfully developed, the Korean firm will be the world's only battery maker with the capability to produce all three form factors in its portfolio.

The prismatic batteries will be supplied to GM's future EVs.

“We look forward to deepening our collaboration to drive the right chemistry and battery combinations for continued growth in the EV market," said Suh Won-joon, executive vice president and head of LG Energy's Advanced Automotive Battery division.

Updated, Dec. 3: Added background information on the plant, details about GM's reasoning, future joint venture plans for pouch-type batteries.

BY SARAH CHEA [[email protected]]